The Dark Side Of Billionaire Philanthropy
Why billionaire philanthropy is another scam disguised as something good.
20 miles south of downtown San Francisco rests a lavish place. 98 rooms, a reflecting pool, and gardens that were designed largely from Versailles garden arrangement. The Carolands mansion was a lovely place and so many cars are lined up in front of the gates on a weekly basis.
They’re not there for charity. They are waiting in hopes of getting a ticket to receive a tour of this place. You have to apply at least a month in advance if you want to even get a chance to be considered.
And given that the Carolands are only open two hours per week, getting a ticket is akin to getting the golden ticket to see Willy Wonka’s chocolate factory. It’s a lottery.
A ProPublica journalist managed to get inside and talk about their experience. But what interests me the most is that this lavish place belonged to Charles Johnson, a man who donated this mansion in 2013 to his private foundation. He was the CEO of Sears, a very wealthy man.
When he did so, he assured to the IRS that his private foundation would use this donation for educational purposes. They applied for the mansion to be tax-exempt for this reason. And they also said the estate would be open to the public Monday to Friday from 9am to 5pm.
The plan worked. The IRS granted the foundation a tax-exempt status and the Johnsons saved $38 million from the estate over five years.
But clearly the Johnsons never made this mansion public for 40 hours each week. Today you have to be one of those lucky souls to get a chance to get in. Hand picked by someone who works at the foundation.
This method of selection is a practice that wasn’t described at all in the IRS application.
What was pitched as something that could benefit the public turned into a vanity project that offers little if any benefit to the public as a whole.
The example ProPublica presented is just one example, but we’ve seen plenty of these examples over the years.
Billionaire investor Mark Cuban has created a company to sell prescription drugs at a more affordable price range for Americans. He’s tackling big Pharma all on his own.
Mark Zuckerberg announces a $100 million grant to schools in Newark, New Jersey a few years back.
Tech giant Google is giving away Chromebooks and mobile hotspots for rural California students.
Elon Musk donated nearly $6 billion to charity through the Musk Foundation. A foundation that would offer grants to individuals who are “developing safe AI that benefits humanity”, along with other causes.
People can easily use these and so many more as prime examples for how billionaires are a natural and needed part of human betterment. After all, they’re using a portion of their own — what feels like — unlimited resources to do something actively good for humanity.
But what if this act of charity is that? An act? A gesture to distract people from the harm they are doing and the power they are building up by showing a bit of generosity.
A shred of humanity on a day when they would act completely different any other day of the year.
For sure, these acts of generosity are a good thing. New Jersey schools have more money to work with. Rural California students have a better level of education now that they have access to the internet for research and so on. Americans now have better access to cheaper drugs in a system where big Pharma is blantanly nickle and diming and screwing everyone over.
To say these don’t benefit humanity is absurd. And to get angry by it is to suggest you’re against giving people affordable healthcare, education, and better career opportunities in the future.
But when it comes to billionaire philanthropy — at least most of it — it’s important to have context. To look at the person and the full scope of good and improvement these have offered to people. And it’s by looking at how good or how much improvement there was where we begin to see the dark underbelly that is billionaire philanthropy and just how beneficial these acts of human betterment actually are.
Similiar to a mansion that was meant to be a museum where people can learn and appreciate it, a lot of foundations and acts of charity from billionaires turn into what we see with Carlsons mansion — a small shred of improvement with an underlying purpose that the public isn’t fully aware of.
How Human Betterment Ought To Look Like
Wildfires are common place these days, but when one in Sevier County happened in November 2016, something different happened. The region’s homegrown hero devised a way to help out the victims fleeing their homes due to the wildfires.
Her name is Dolly Parton.
And through the Dollywood Foundation’s My People Fund, she gave away $1,000 each month for six months to Sevier County families, focusing on those residing in the Smoky Mountains.
She helped support nearly 900 families through peoples generous donations.
That was in 2016. And when you do a google search for “My People Fund”, you’ll see that the site no longer exists. The link in that article above redirects you to Imagination Library — another foundation by Parton where Tennesse kids receive childrens books.
That’s not to say what Dolly Parton did was a scam. Those wildfire victims received their funding with no strings attached.
But rather when the wildfires stopped and people were able to get back on their feet and back to their lives, the My People Fund stopped accepting donations. It closed down.
It did what it had to do. It focused on a specific problem and solved it.
Dolly Parton is one of the few exceptions of billionaire philanthropy done right. All the money that people donated to that cause went directly towards the cause that the fundraiser said it would. There were no work arounds. There were no change of plans. It had a purpose and a mission and it accomplished it.
A lot of that can’t be said about other causes or kind gestures that billionaires or massive corporations provide. For sure they deliver warm fuzzies and people enjoy donating to a good cause. But it’s undercut by a wide variety of problems that come with it.
Parton’s efforts are one of the few where a practical and good result is coming from it. In a state where books are being banned left and right, Parton’s doesn’t care and is providing the joy of reading for children with a wide variety of books. This is on top of the relief from those wildfires years ago.
What’s Wrong With The Current System
Rich person philanthropy really started to take root with Rosenwald Schools. During a time where school segregation was a more problematic (and still very much is) in America, a wealthy man named Julius Rosenwald decided to build schools around the South to help facilitate the education of black children who lived in those southern states.
He would take a portion of his funds and put it towards the school and the rest of the black community would have to pay out of pocket to cover the rest of the cost.
It sounds like a great deal on paper. At a time where black children were not even allowed to have an education, here was someone fighting against the cause. He focused on providing education to those marginalized communities in the South.
But looking closer, there was something off with the whole thing.
While it does provide education and is very helpful, and it achieved some great results, it’s undercut by not addressing the root problem. Namely that Rosenwald schools didn’t challenge any of the Jim Crow southern legistlation. In fact, as that article points out, it reinforced a lot of the school segregation problems America faces.
This isn’t just one example. Many billionaire philanthropy models these Rosenwald school ideologies. Even though foundations are donating laptops, polio vaccines, or fighting for climate change, how they’re going about it doesn’t exactly feel right when you look beyond the act.
In the case of Google, giving away Chromebooks is a very nice gesture during the covid pandemic. It encouraged remote learning for children who otherwise wouldn’t have internet access. This gesture was also extended to schools who have enhanced educational tools.
The only problem is Chromebooks have an inherent death date where they stop functioning and have to be tossed out. Even though the death date is usually 8 years or so (an above average life for most computers), some laptops can survive for even longer when kept well. Not to mention, Google might not be so generous in giving out more computers to these schools once every decade or so.
It’s these particular nuances and so many other things that make these kind gestures less wholesome and more sinister in nature. And in worse cases do little to solve actual problems.
What seems to be more of the case is a larger tangible benefit to those who are doing the giving and it’s these foundations that create more problems than actually solving them.
First Is The Tax Shelters
The reason I brought up Carlson mansion and the massive savings it brought is for this particular reason. While the multiple foundations are designed to do great things and serve the public, the ultimate goal is to save billionaires an insane amount of money.
As the ProPublica article explained, when billionaires or ultrawealthy can donate valuables like artwork or real estate or stocks, they make a sizable cut in their tax bills as a result. There are very generous tax breaks that are offered, but as the Carlson mansion tours show, they can have a lot of strings attached to the generosity.
Instead of anyone coming in during the weekdays, we’ve got a lottery situation on our hands. And in the case of other foundations, those across the US hold over $1 trillion in assets.
Tax-free by the way.
And while those donors have gotten millions in tax breaks for those generous donations on top of that, we’ve seen those same foundations enrich their foundation donor while also providing little to no value to the public.
An obvious example is the Trump Foundation which has used funds from the organization to settle Trump lawsuits. There were also portraits of himself (as well as a signed football helmet) that he bought using his non-profit and those purchases are not in any orphanages.
Even though we know Trump is an obvious grifter, this same behaviour is echoed amongst many other foundations.
When Patagonia’s billionaire owner — Evan Chenard — decided to “donate his business to charity” a lot of people overlooked how generous his donation actually was. Adam Conover did a video around the time the donation went through and explains how Chenard not only saved billions in taxes, but made a move that can influence the American political system.
All the while bypassing taxes that would improve the roads his products are shipped on and other public goods that would benefit the public.
And while Patagonia does have a track record of fighting against climate change, supporting green initiatives and is generally trying to help the planet, that same maneuver isn’t reserved to just Chenard.
For every billionaire out there, they could perform this exact same move and not every billionaire out there is really out there to save the planet.
Ultimately this is a massive piggy bank that billionaires can just throw money into and build up wealth without having to spend all of it. With roughly 260,000 philanthropy foundations in the world, they collectively store over a trillion dollars in assets.
Second Is To Consolidate Power
The Rosenwald schools are an example of this where the Southern US continued to build up power and enforce a particular way of life. Sure black Americans weren’t exactly slaves, but they were and are still treated like them to some degree even today. In a lot of situations, these various foundations when built in this fashion are able to amass and effectively solidfy their power over common people who are desperate for help.
More recent and prime examples of this are the Clinton Foundation and the Bill and Melinda Gates Foundation.
In the case of Clinton, their biggest disaster was with Haiti where they were able to suppress a 37 cent price hike in garment manufacturing. And when Haiti was hit with an earthquake, a Clinton-Bush fund was set up only to delay and create indecision in how Haiti would recover from all this.
When the earthquake hit, the fund that Bill Clinton and George W Bush set up was directed towards rebuilding garment factories. Sure that’s great, but Haitians were living in tents, dying of cholera, and went through a major earthquake where rubble filled the streets. Trying to get their economy up and running isn’t their top priority.
You see this same sort of theme with the Gates Foundation where the foundation shifted to fight polio — an endemic only in two countries but still spreads around the world. Even though polio is a highly infectious disease it’s important to note that the only two countries dealing with this issue is Pakistan and Afghanistan.
That’s not to say Pakistan and Afghanistan should have their kids suffer, but rather that these are countries that are torn by war and invasions and polio isn’t as big of an issue. Yes polio is a problem, but with so many people living below the poverty line that even the Prime Minister is aware of, it’s clear different kind of assistance is needed.
Instead though, we see one person having to decide the fate of several lives. Fight polio or give the children shelter, clean water, and food? Let’s fight polio first.
Even though both things are good and helpful we see this time and time again in self-help where underlying problems aren’t always being tended to. They’re ignored or brushed aside and instead focus on one person’s particular vision for what help looks like.
No consultation of other people’s ideas. And only pivoting when it’s something that agrees with the founders current worldview.
We’re allowing the Gates Foundation to even dictate how education is being taught. After all, who needs creative thinking, reading or writing when math is the most important thing everyone should know about.
Who needs that silly thing called immagination anyway?
At the end of the day, this is all a power grab where a small group of people — or individual — gets to decide what is best for people in certain key decisions. When a country was torn by war or a massive natural disaster, the priority went to something completely unrelated to the very real problems that every day people were facing.
And there was nothing the residents could do about it. Because a revolt would result in losing that aid forever and they would be in a worse state than if they had it. And yet the help they were getting was not solving the problems they were facing.
It Provides Little Practical Use
All of this is reinforced by the fact that the help that’s being received has very little practical use. In the case of Carlsons tours, this was meant to be a nice experience that the public could simply enjoy. It’s like a museum. And yet only a handful of people get to see it.
There have been other examples that ProPublica pointed out in their piece. How art galleries in people’s homes were locked away. How a tech billionaire used his charity to buy a house for his girlfriend and crash there when going through a divorce.
Those to me sound more like personal benefits rather than a benefit for the public. And yet for tax purposes these are labeled as private foundations and donations to the public.
Even the Chan Zuckerberg Initiative — created by Mark Zuckerberg and Priscilla Chan to put laptops into poor children’s hands — somehow managed to become a tax-qualified charity where they are allowed to hoard money entirely tax free. They pumped $45 billion into this “charity” despite the fact the charity was designed to generate revenue for them via capturing data from millions of computer users that no other company was able to tap into.
Sure it serves its purpose in bringing access of the internet to more people, but knowing what we know about Facebook and its practices around data this looks more like a tax shelter move with dubious benefits to humanity and enriching someone who doesn’t really need the extra money.
Even the Gates Foundation was more of a publicity stunt when it was first created. In the 1990s, the 2000 Justice Department concluded Microsoft’s hyperaggressive business practices made it into a monopoly. We used to see Bill Gates as nothing more than a bully.
But the creation of his foundation immediately changed people’s tune. “Oh he’s fighting against polio.” “Oh he’s trying to reform education.”
Yes, the computer guy with no background in medicine or education is definitely trying to do those things. All with a wrinkly iron fist.
Yes some good has come from those efforts, but the Gate’s Foundation has been going after polio for a few decades now. And focusing entirely on math and boosting those math test scores or exposing more people to math over creative pursuits won’t solve larger systemic issues and equality problems.
Like the Rosenwald schools, school segregation is still a problem and it reinforces racist stereotyping and thinking even if the end result wasn’t fueld by racism.
The one thing we can see consistently is that these foundations allow billionaires to play God with other people’s lives and suffer little to no consequences. Even when their experiments end in disaster, they get a slap on the wrist if at all.
What Billionaires Should Do
It’s not like “benevolent billionaires” are ever going to read this but for us common folk we have to recognize that we’ve been falling for these gifts of charity for a very long time. People might not agree with the Clinton’s for political reasons, but people still defend Musk, Zuckerberg, Gates, and so many other wealthy individuals that their gifts of charity are actually benefitting people at large.
We look at Oprah giving away cars to people which sounds great on paper. But who exactly is paying for the gas? Who is footing the bill for maintenance and car repairs? How about car insurance? What happens if the person can’t legally drive the car?
It’s difficult to get mad at these kinds of gestures, and I’m not saying we should get mad for them. Gifts and assistance to other people not as fortunate as you are a good thing. But when we’re considering the much larger movements from billionaire foundations and how one person is shaping the world, it helps to take a step back and look at the practicality of it. What exactly are we endorsing when we donate to the Clinton Foundation? What are we allowing by lining up in front of an old mansion with the hopes of being guided around?
Dolly Parton is a prime example of rich person philanthropy done right. Her foundation is focused on a specific goal and it does it well. Yes, children’s access to books isn’t a major issue in Tennesse, but we do know reading generally is a pretty good thing. So is learning new words and expanding a child’s worldview and imagination.
Ultimately making them more open to the world and allowing them to see the possibility of it being more than a playground for billionaires to play God.
Learning that 1+1=2 doesn’t exactly have that same effect.
Foundations like Parton’s focus on a short-term goal since kids become adults and they no longer need to be reading children’s books. But having access to children’s books at a young age can help them develop an interest and passion for reading. Those kids might grow up to be writers, authors, journalists or enjoy reading and use it to calm themselves down. Reading has a myriad of benefits and this foundation creates a literal foundation to support that.
And in the event of more immediate help — like moving away after natural disasters — those campaigns should be brief and focus directly on problems that people are facing immediately. It’s about getting on the ground and figuring out what those people need help with rather than figuring out what will satisfy the billionaire founder’s ego to this problem.
But beyond how foundations should be structured, there is a case to be made for these foundations to not exist at all.
Mark Cuban saw a problem and created a website that offers affordable prescription drugs to people who need it. Sure it’s a generous thing to do, but is Cuban working with the government to make healthcare affordable? It doesn’t look like it.
With Rosenwald schools, Rosenwald wasn’t using any additional funds to lobby or fight against school segregation. He was content with double taxing black communities who were forced to pay for public schooling by the state and then by Rosenwald who built schools out of the “generosity of his own heart”.
The point is, these rich individuals don’t have to be doing any of this if the root problems were addressed and dealt with at the time. Yes, these problems are complex and there are several pieces to the puzzle. Fixing America’s healthcare system is a messy thing, so is trying to bring a country like Haiti back on its feet and growing.
But it’s absurd to think that a single individual — or entrepreneur no less — who has an absurd amount of money will be able to solve that entire problem all on their own. Especially when they have no background in the problems they say their foundation is fighting to solve.
What sounds much better is people collectively paying their fair share into one big pool of resources that could be spent on whatever is most pressing. Maybe we could elect key people from a wide diversity and backgrounds to help decide where those resources are best spent too. Maybe then we can bring in professionals who have more specialization into particular issues and know how we can get more impact for every dollar and listen to them.
I don’t know. It’s just a crazy thought I had.
Maybe if we do something like that, we can begin to see what billionaire philanthropy actually is: a tax shelter that we keep thinking is a charitable gift that does little to solve problems and creates even more problems.
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